January 27, 2010 / 5:37 PM / 8 years ago

FACTBOX-Caterpillar's 2010 predictions

CHICAGO, Jan 27 (Reuters) - Caterpillar Inc (CAT.N), the world’s largest maker of construction and mining equipment, reported stronger-than-expected earnings on Wednesday but provided an outlook for 2010 that disappointed analysts and sent its shares lower on Wall Street.


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As it does every quarter, Caterpillar included some predictions in its earnings release about everything from U.S. interest rates to oil prices to global economic growth.

Below are some of the highlights:

* “Recent economic data indicates that the world economy started growing again, ending the world’s worst postwar recession. We expect this recovery to last throughout 2010, with the world economy growing more than 3 percent.”

* “We expect interest rates will remain low since unemployment rates are high and inflation rates are low. Even though we do not expect inflation will become a problem, we expect some central banks will eventually implement precautionary interest rate increases.”

* “We project the Federal Reserve will increase rates from about 0.15 to 1 percent by the end of 2010; the European Central Bank, from 1 to 2 percent. Australia has already increased rates to 3.75 percent and likely will increase rates a further 100 basis points in 2010. Several developing countries, including Brazil, China and India, likely will increase rates.”

* “Most key credit spreads have returned to normal and large businesses have access to credit. We expect credit standards for consumers and small businesses will ease, improving credit availability.”

* “Stimulus programs should have maximum impacts in the first half of 2010. Some governments may expand programs to provide additional support.”

* “We expect that world demand for most commodities will increase this year, further tightening supplies. Our planning assumes oil prices will average $83 per barrel, and copper prices will average $3.20 per pound.”

* “Developing economies are growing again, and we expect they will lead the economic recovery. Economic growth in the developing world should be about 6 percent in 2010, up from 1.5 percent growth in 2009.”

* “We expect more than 10 percent growth in China and 8 percent growth in India. These high growth rates should continue to improve construction spending and encourage investment in mining capacity.”

* “Latin American economies recovered rapidly in the last half of 2009, and we forecast regional growth of almost 4 percent in 2010. Ongoing recoveries in construction and mining should continue.”

* “The economies of Africa/Middle East and CIS should grow about 3.5 percent in 2010. Higher energy and metals prices should encourage producers to increase investments and production.”

* “Developed economies have performed poorly for several years, and recoveries have been slower to develop. We expect these economies will grow 2 percent in 2010, which will maintain significant excess capacity and keep inflation subdued.”

* “We forecast 3.5 percent growth in the U.S. economy, which is slower than past recoveries from severe recessions. Housing and mining production should improve from very depressed levels in 2009. However, we expect continued decline in nonresidential building construction, and delays in passing a highway bill likely will cause highway contractors to remain cautious about purchasing equipment.”

* “The European Central Bank appears to be reducing its liquidity support, and bank lending remains weak. We expect very modest recovery in 2010 — economic growth of about 1 percent. Construction surveys indicate spending should rebound somewhat, particularly for infrastructure.”

* “The Bank of Japan has not been able to end deflation and the associated weak economic growth. We do not expect any policy improvements this year, and the Japanese economy should grow only 1.5 percent in 2010.” (Reporting by James B. Kelleher)

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